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Vicinity Centres (ASX: VCX) is taking full ownership of Chatswood Chase Sydney after signing an unconditional deal to acquire a 49 per cent stake in the property for $307 million from Singapore’s sovereign wealth fund GIC.
The buyout gives Vicinity greater exposure to one of Australia’s most affluent catchments and comes on the heels of a shake-up of the company’s retail property portfolio.
In tandem with today’s announcement, Vicinity has announced the sale of the Roxburgh Village centre in Victoria to JY Group for $123 million, with the sale pitched at an 8.8 per cent premium to the property’s latest book value.
Until 2017, Vicinity had full control of Chatswood Chase before offering a 49 per cent interest to GIC in exchange for a 50 per cent stake in upmarket Sydney CBD retail assets The Queen Victoria Building, The Strand Arcade and The Galeries.
Vicinity’s 51 per cent interest in Chatswood Chase is currently valued at $341.7 million, making the $307 million deal for GIC’s 49 per cent interest an attractive proposition for the shopping centre group.
“Premium retail assets such as Chatswood Chase are a key pillar of our strategy and are an important enabler of resilient income growth and sustained value accretion through cycles,” says Vicinity CEO Peter Huddle.
“While we retain the right to nominate another purchaser prior to settlement, we are nonetheless pleased to take full control and expedite our board-approved redevelopment of the asset.”
Chatswood Chase is currently undergoing refurbishment work on its lower ground floor as part of a broader major redevelopment plan for the north shore retail centre.
“Chatswood Chase is an iconic asset with strong growth potential,” Huddle says.
“Our redevelopment plans represent one of the most exciting and transformational projects to be undertaken in Australian retail property today and for the foreseeable future and will reinforce this exceptional asset as northern Sydney’s premier retail destination.”
The main construction works for the centre are planned to start in March with completion scheduled for October 2025, which Vicinity says will lift Chatswood Chase’s valuation to $1.5 billion.
The latest acquisitions and divestments by Vicinity come on the heels of the company announcing in June the sale of a 50 per cent interest in Broadmeadows Central shopping centre for $134.5 million.
Since June, Vicinity has signed contracts for the sale of more than $40 million of non-core land parcels and adjacent properties, with the company noting that these sales have been struck at ‘meaningful premiums’ to June 2023 book values.
“These transactions demonstrate disciplined execution of our active investment program,” Huddle says.
“We are recycling and allocating capital to fund value-accretive developments and acquisitions of premium assets aligned with our portfolio strategy while at the same time, preserving the strength of our balance sheet and credit metrics.”
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